To make a smart investment and to truly know what an energy asset is worth, it is crucial to find out what drives its value, the risks involved, the strategic position of the project or asset relative to its competitors, and how to manage adverse consequences.

Every consulting project is unique, requiring a well-designed, thoughtful approach to come up with the most accurate independent research. We take it one step further with clear advice on how to interpret that research, based on our multifaceted energy-industry experience.

Clients often ask:

What are the strategic drivers that can benefit or harm my business going forward?

How much is our asset worth and what drives its value?

What are the financial risks associated with our business? How can we manage this risk?

How can we extract more value from our assets?

What transmission and transportation challenges do our assets face? How can we address these risks?

How can we structure products or transactions in the wholesale energy markets?

Find out more about our approach to these questions below or contact us to discuss your next project.

Our Approach

How we do it

We provide our clients with clear, custom analysis of their assets and potential investments—the merits and risks—so they can make informed decisions.

We ask the right questions – The first step in any project is to intelligently define its goals and parameters. We work closely with clients to understand what questions need to be addressed and what data and modeling can be used to answer them. This step is critical because it clearly establishes expectations and helps the client understand what insights will come from the project.

We choose the right analytical tools – Once the project has been defined, we work with the client to select the appropriate analytical tools. We tailor our modeling to the problem(s) being addressed and the client’s budget. We are proponents of bringing as much relevant data as possible to bear on a particular problem, and while we are capable of building large, complex models, we strive to build the simplest, most transparent one that will get the job done. Accordingly, we can incorporate large volumes of energy-market data published by independent system operators, the Federal Energy Regulatory Commission, the Energy Information Administration, and other sources of proprietary or publicly available data.

We identify and acquire the right data – There is a wealth of energy data available today. We use our judgment and creativity to determine the best and most relevant data sources for answering a particular question. We also have extensive data infrastructure, which allows us to acquire, clean, store and utilize large volumes of it. This allows us to incorporate significant analysis into our projects in cost-effective ways.

We clearly communicate the results – Our analysis is only useful if we can clearly explain the process, results and implications in a way that makes sense to our clients. We strive to make our written reports easy to read and use informative graphics wherever possible. We also realize that although our clients have substantial knowledge of the energy industry, they may not have deep knowledge of the area that we are analyzing for them. We can explain complex nuances in a manner that resonates with our clients.

Practice Areas

Asset Valuation

Investors in energy projects face complex transactions with a high degree of risk and uncertainty. When evaluating the purchase, development, or sale of an energy asset, the fundamental questions are “what is the asset worth?” and “what are my risks?” We have extensive modeling capabilities that help customers gain insights into value, and more importantly, the fundamental drivers of value today and in the future. We help clients understand the envelope of opportunities, the critical weaknesses, and how to mitigate risk.

At Energy GPS, we take a disciplined and quantitative approach to asset valuation. We work with historical and forward supply, demand, and price data to develop well-reasoned analysis that is tailored to our client’s needs. As former energy traders who are engrossed in the daily energy markets through our product business, we are uniquely positioned to provide clients with both the quantitative analysis and the judgment that is needed estimate future value and the key drivers that will impact value.

Navigating capacity markets can be extremely difficult in today’s electricity industry. As more intermittent resources are added to the grid, we should see a corresponding need for flexible ramping capability. As economic growth resumes in North America, electricity demand is on the upswing. But there are many headwinds. Low natural gas prices keep electricity prices down. Renewable Portfolio Standards in some regions have resulted in increased supply of energy at a time when the grid doesn’t need it, further depressing prices. To make matters more complicated, each market has different policies on how capacity resources are compensated and there is a wide array of technologies that can be deployed to meet the capacity needs.

Two things are clear to us at Energy GPS – (1) there will be demand for new capacity in the coming years and (2) which resource provides the right type of capacity is market-specific. We bring a multi-pronged approach to evaluating capacity product opportunities. We start with an overview of the regulatory regime – how does an asset get compensated for capacity products? We then estimate how much money a given asset would have earned given historic energy and capacity prices. We develop an understanding of the fundamental drivers of capacity value going forward and work closely with our client to evaluate revenue streams under a variety of future states. Ultimately, our goal is to help our client find the sweet spot where the right capacity resource is deployed at the right time into a market that needs it.

Electricity markets are highly regulated. A complex web of state, regional, and federal regulations have a tremendous impact on energy markets and asset values. Regulations to stimulate renewables and limit carbon are fundamentally shifting the resource stack of the future. Other regulations on coal plants and once-through-cooling are changing the existing generation fleet. No single electricity policy exists in isolation –it interacts with a suite of existing rules, creating a new set of winners and losers. Energy GPS helps clients understand and dis-entangle this web, providing insights into what the future will look as the regulatory environment changes.

Teasing out the cost of intermittency and the value of flexible resources is one of the biggest challenges facing the industry today. We have extensive experience in the area of intermittent resource integration. We have worked with developers, existing projects, wind forecasters, and balancing authorities to think creatively about the best ways to integrate wind and other intermittent resources. Each project is different, but they are all based on the same type of analysis and expertise. We help clients understand what intermittent energy is worth, we think creatively about the logistical challenges associated with intermittent resources, and what capacity products are needed and valued to respond to the increased demand for ramping.

Whether you are an experienced energy trading firm or new to the wholesale energy markets, Energy GPS staff can advise you in the area of Energy Trading and Risk Management. Our energy trading experience combined with our active involvement in today’s wholesale energy marketplace provide us with an excellent vantage point to assist clients who are navigating through the complex world of trading, logistics, and risk management. We literally have decades of experience in this area.

While each engagement is unique, we typically serve as a strategic advisor to firms that are either developing or reviewing their logistics and risk management needs. There are a dizzying array of needs, regulations, and vendors in this space. We help clients to define the appropriate risk management policies, review the external vendors and software tools that are available, and implement reasonable and effective risk management policies and practices that are appropriate to the client’s needs.

We can’t count the number of times clients have asked us “Is there a book or article that we can read that explains wholesale electricity markets?” Due to the complexity of wholesale electricity markets and the unique needs of each client, there is no readily available resource that we can point to that addresses this training need. In response, Energy GPS has developed a series of training modules for our clients. These modules include: An Overview of Wholesale Electricity Markets, Wholesale Electricity Trading Fundamentals, Advanced RTO Training, and Wind Integration Training. Each training module is customized to meet the specific needs of the client so that employees can directly apply the knowledge gained through our seminars to their work. Our introductory training courses are designed for a broad audience within an organization, bringing the overall energy IQ of the staff to a higher level. Our more advanced training courses are targeted at a particular set of employees with a specific knowledge gap that they are hoping to fill.

Generation project developers need to understand whether their project is located at a good spot on the grid. We help clients understand whether a project is in an advantaged location, and if not, how to secure the transmission that is needed to get the output to market. For existing projects, we help clients navigate the world of transmission acquisition and congestion revenue rights to mitigate transmission risk.

We help merchant transmission developers and investors understand the economic value of existing and potential transmission assets. We begin with market fundamentals – what fleet of resources will use a transmission line to serve what load? How will this change in the future? We also assist with developing and negotiating the commercial arrangements that are needed as transmission lines go from the drawing board into financeable commercial structure. Who are the likely off-takers? Why do they need the line? How will they use the line? What value does a given piece of transmission provide to them?